ABSTRACT
This chapter provides an introduction on the microeconomic concepts and principles that are helpful for exploring the economic attributes and behaviors of consumers and firms respectively in the markets. The related principles are discussed with reference to the practices of the hospitality industry. In particular, the nature and determinants of demand and supply, and their interactions in the markets are identified and explained. In addition to the general discussions on the role of price in the markets, other non-price factors like individual income and time in consumption decisions, as well as cost and technology in production decisions are elaborated. Furthermore, the different types of elasticities of demand and supply are explicated respectively in terms of their basic principles with practical examples. The related materials provide a comprehensive framework to enhance current understanding on the responsiveness of consumers and firms to changes in the major determinants of demand and supply. Keywords: demand; supply; market equilibrium; determinants of demand; determinants of supply; changes in quantity demanded and demand; changes in quantity supplied and supply; price elasticity; income elasticity; cross-price elasticity
